A blog dedicated to commentary, technical analysis, and the general machinations of the global gold and silver bullion markets with additional commentary on the global economy and related commodity markets.

Friday, May 25, 2007

Beware The Darkside

If you ever need proof that market participants all too often react to the "headline" and not the "story", yesterdays amusing action in the stock market is it. Below, the headline shouts the rosy picture, and down inside the story the darkside is revealed.

US April new home sales rise 16 pct to 981,000 annual rateWASHINGTON (Thomson Financial) - US sales of new homes rose 16.2 pct last month to an annual rate of 981,000 units, way above expectations for an 861,000 rate, the Commerce Department reported today.The median price of a new home last month fell an annual 11 pct to 299,100 usd. That was the biggest decline since a 15 pct drop in the year to July 1970.On a month-on-month basis, prices fell a record 11 pct between March and April.http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=6721192b-be81-4931-a369-c62e2caba35a

And the stock market took off...but then somebody read the "story" and the stock market tanked. And brought everything down with it. Very amusing... How the Dollar escaped the carnage escapes me. Precious metals got smoked...though that was probably more to do with options expiring yesterday...absent that, and I don't think metals are off so hard. Copper of course fell on the poor assumption that this data did not bode well for copper demand. LOL, America's Economy is 51st on the list of national economies...I doubt it's current demand, strong or weak, has any real impact on World demand for the red metal. When will people wake up to the fact that the World Economy grows less dependent on the USA as each day passes?

Oh look, Oil is back up AGAIN this morning...

I am as frustrated as the rest of you with the Metals. Have we learned anything in the past four weeks? Yes, May is not a great month to trade the metals...it's a great month to buy them on sale. I'll take this May over last though...certainly. We should also expect a similar rotten "experience" to occur when the August to December rollover period arrives. Looking back on the charts, last September's "false breakout" and subsequent dump might be a good reminder of the possibilities come Labor Day.

Continue to "keep the faith"...solid fundamentals remain in our favor and markedly bearish sentiment usually coincides with a bottom. The present contract rollover period should end next week. We continue to hold our ground in Silver at the 200 day moving average, and that has signaled a low risk buy point and trend reversal when the opportunity arises. Until we break the downtrend line and put some pressure on the shorts technically, we will have to be content to waffle around down here. 13.03 Silver remains our pressure point...666 Gold.

I’d like to report on a profound new development in the silver market. It’s a development that has been over a year in the making, but I wanted to be sure I wasn’t jumping the gun in writing about it. Let me give you the conclusion upfront. It’s a new and powerful reason for making a long-term investment in silver.